Tuesday, September 26, 2017

Before worrying how much you need and should save for retirement, make sure you don't need to spend your retirement fund too early, or risk your retirement fund at all.

Insurance is not just about Medical Card (a benefit that prevents you from spending your retirement fund too early), it is also about Income Replacement (a benefit that substitute your living expenses and retirement fund should you need to stop work due to critical illness) especially Critical Illness Coverage.

Start saving part of your income to guarantee you at least a 5 to 10 years of Income Replacement. The amount you set aside, can NEVER be more than what you will be compensated.

e.g.
If you are age 35 and save aside RM4,800 a year for a coverage of RM500,000 (Income Replacement), it will take at least 70 years (with interest) to save the RM4,800 by yourself in a bank or investment vehicle.

With an Income Replacement coverage, you will be compensated with RM500,000 lump sum cash, even as early as 2 years after you sign up.

Question: Why do it on your own when you can leverage on Insurance Companies?